- Sequentially and year-on-year, quarterly service revenues decreased primarily due to branded contract customer losses. The decrease, however, was partially offset by the increased adoption of data plans in both the contract and prepaid customer base. Additionally, branded prepaid revenues increased compared to the prior quarter and the fourth quarter of 2011 as a result of the continued success of the Monthly4G plans. Adoption of the Company’s Value plans, which do not include handset equipment subsidies, adversely impacts service revenues but results in higher equipment revenues when compared to traditional bundled pricing plans.

- Data service revenues, including messaging, were $1.5 billion in the fourth quarter of 2012, consistent with both the prior quarter and the fourth quarter of 2011. Data service revenues in the fourth quarter of 2012, excluding messaging revenues, accounted for over 70% of total data service revenues and increased 10.5% year-on-year.

- Total revenues declined less than service revenues compared to the fourth quarter of 2011 despite losses in branded contract customers as equipment revenues increased year-on-year due to stronger smartphone sales and handset program changes in connection with the Company’s Value plans.

- The Company’s Value plans, which were first introduced in the third quarter of 2011, allow customers to subscribe to wireless services without the purchase of or upfront payment for a bundled handset. This results in a reduction of initial subsidies and benefits adjusted OIBDA and net income within the quarter of purchase. Qualifying customers may separately purchase handsets at any time, either deferring payments over 20-month installment contracts or paying the full price at the point-of-sale. Compared to traditional bundled price plans, Value plans have lower monthly recurring charges which result in lower service revenues over the service contract period, while recognizing higher equipment revenues at the time of the sale. In the fourth quarter of 2012, Value plan customers accounted for over 50% of the branded contract gross additions, which is consistent with the third quarter of 2012. Additionally, Value plans made up 30% of the branded contract customer base at the end of the fourth quarter of 2012. This is up from 23% at the end of the third quarter of 2012.

Adjusted OIBDA and OIBDA

- Sequentially, adjusted OIBDA decreased primarily as a result of planned higher advertising expenses associated with the Company’s re-branding initiatives and lower service revenues. Year-on-year, adjusted OIBDA decreased as a result of lower service revenues due primarily to branded contract customer losses and increased expenses associated with the Company’s rebranding initiatives.

T-Mobile USA